In March 2020, there was an inexplicable run on toilet paper. To the best of my knowledge, COVID didn’t impact your bowels and Costco sells toilet paper by the ton. And yet, all of a sudden, everyone needed to have it, told their friends they were getting it, and started to see it missing on shelves. Panic set in and shoppers ran from store to store to acquire the hottest ticket in town. Prices soared as supply couldn’t keep up with demand. Rationing was done by supermarkets to ensure people didn’t buy more than 1 package, and a black market for toilet paper emerged. It was truly nuts.
Sadly, that is the trajectory we are about to embark on in energy.
European Union countries agreed Monday that all natural gas storage in the 27-nation bloc should be topped up to at least 80% capacity for next winter as they prepare for the possibility of Russia further reducing deliveries.
Natural gas is used directly in fertilizer. It’s used indirectly as electricity in factories. It is a global commodity and plays a large role in heating homes during the winter. Sure, it’s uncomfortable in the summer when it’s 82 F in your house but pipes burst and people die when it’s cold.
In September 2021, I posted that I thought millions of Europeans would die and 10s of millions would go bankrupt. Winter was relatively mild and Russia didn’t invade Ukraine until the end of February 2022. Winter 2022/2023 will not be so kind and European leaders know it. They are already re-activating coal facilities. India is buying Russian crude at all time high levels. Panic is setting in and it’s June. Ultimately, there is a strong case to be made that rationing is going to shut down European commerce. Without commerce, people lose jobs. Without jobs, people lose houses. Without houses…. Well.
There is a HUGE global problem that simply cannot be solved with present thinking. Supply WILL not increase in the short term. China WON’T increase their refining utilization. And Russian sanctions WON’T work because they have the only way to increase supply since it’s limited due to sanctions. If they cut off natural gas to Germany… imagine the worst. And all this is before Houthi rebels bomb a Saudi facility again, Iran saber rattles around nukes, or the Gulf of Mexico gets whacked during hurricane season, as it does every year now through October.
If we don’t change course, I deeply fear what comes next: if you can’t raise supply, you hit demand, and the last time we wanted to take demand down by 35%… we locked everyone in their houses for 6 weeks. And I know … I know… they couldn’t possibly. I said that in 2019. I guess the other choice is refine change in Russia and we all know that comes with nuclear weapons. Pick your poison but it’s hard to feel confident in leadership at the moment because only Putin seems to know what he is doing. What our leaders are doing is that they have been hoodwinked by climate religion, race, and god forbid, the tragedy of gender confusion while completely ignoring problems of life or death like energy, food, and supply chain. Putin leads a country with leverage in resources that is acutely aware of his need to be strategic to survive, while others take survival for granted. Maybe we need to remember that ultimately life is about survival, and those that have survival as their objective….will. Others, won’t, and it will be too late as the strong will be ten steps ahead.
Good read, as usual my man!!
I very much appreciate the blunt reality check - people and politicians have always had plenty of real problems to tackle. In the last couple of years it has been very hard to understand why there has been so much focus on matters that are not nearly as critical, while ignoring, denying or making worse the real issues of survival and quality of living. I guess this is what it will take for some people to recognize the need to prioritize.